Professional Documents
Culture Documents
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Evolution of Corporate
Social Responsibility
Corporate social responsibility (CSR) can be traced to
early industrialists who recognized that their activities
impacted the fabric of society, which led to a desire to
realize the ensuing moral responsibility via philanthropy
and charity. From this origin, CSR has evolved to be
related more closely to its impact on stockholders. CSR
is no longer a moral imperative but has become another
driver of value through which a company can reduce
risk and costs and simultaneously improve branding and
media recognition. In this regard, CSR has evolved to
include concrete activities that corporation can report.
These answer societys pressure and satisfy investors
concerns. In that context, CSR no longer carries the same
meaning for corporations, investors and consumers.
In its second annual public opinion survey,1 Do Well
Do Good reports that a majority of consumers (83%),
expect corporations to accomplish their business goals
while trying to improve society and the environment.
The survey found 70% of consumers hold CEOs to a
high level of responsibility for their companys impacts
on the environment, employees, and their larger community. If an employee tells them why a cause is important
and why the company supports it 61% of customers
are willing to support the cause marketing. Employees
have a positive view of their companies in general, and
about 70% believe their employer is honest and transparent about their business practices and manufacturing
processes and also effective in regularly contributing to
charities and non-profit organizations. They are also
satisfied with employers attitudes in allowing employees
to volunteer on company time.
Tracking Corporate
Social Responsibility
Beyond this survey result on general attitude, MSCI
provides Environmental, Social and Governance
(ESG) ratings2 for 3,100 companies. Their scoring
spans six major categories: Environment, Community,
Employee Relations, Diversity, Corporate Governance,
and Product. Additionally, the ratings system contains
indicators that track if a company is involved in controversial business activities: alcohol, gambling, firearms,
military, nuclear power, and tobacco. This information
is invaluable to the investment community as well as
watchdog organizations that monitor corporate activities and their impacts on society.
The table below illustrates which corporate actions
result in a positive (Strength) or negative (Concern)
rating for each corporation for each category. These
are some examples as the MSCI process contains more
measures.
Concern
Environment
Waste Management
Raw Material Sourcing
Community
Community Engagement
Innovative Giving
Community Impact
Employee Relations
Child Labor
Supply Chain
Diversity
Workforce Diversity
Governance
Reporting Quality
Financial System Instability
Governance Structures
Controversial Investments
Product
Quality
Access to Finance
Anticompetitive Practices
Customer Relations
Using the available data for the majority of these measures, we aggregate companies strengths and concerns
in these various CSR areas to track the improvement of
CSR actions by firms in the United States and contrast
that to those of Maryland companies. The evidence is
presented in Figure 1.3
Nationwide, the evidence indicates a troubling trend of
decreasing ratings for U.S. corporations, which reflects
increasing violations of the public trust in matters of
executive compensation, lack of transparency and
weakness in diversity policies. During this time, the
Maryland scorecard did not deteriorate to the same
extent showcasing that Maryland firms have improved
their record.
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Figure 1. Historical trend in CSR rating for United States and Maryland companies
0.6
U.S.
0.4
MD
0.2
Difference
0.0
-0.2
-0.4
-0.6
-0.8
2003
2004
2005
2006
2007
2008
2009
2010
Legal Environment
While not under the direct purview of the state, MaryU.S.commitment to support companies
land demonstrated its
that put principles before profits. On April 13, 2010,
MD
former Governor Martin OMalley created a legal
structure for benefit corporations, which insulates them
from shareholder lawsuits.4 The protection allows the
benefit corporations to blend more effectively business
with social and environment good.5 In order to be
granted the status, these firms must continually report
on their activities and submit to audits. Marylands
law was the first of its kind in the nation and has been
quickly followed by similar initiatives in a dozen states
including Vermont, New Jersey and Virginia.
Strengths
Concerns
W. R. Grace
Company Name
-3
Legg Mason
McCormick 10
10
Under Armour
-2
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W.R. Grace
W.R. Graces CSR score of -3 reflects three concerns.
W.R. Graces lack of women on its corporate board
back in 2010 was combined with issues related to the
quality and safety of its product and its impact on
the community. As of 2015, the companys current
board of directors comprises 10 members, of which 3
are women: Marye Anne Fox, Diane H. Gulyas and
Janice K. Henry.
Graces community stewardship centers on STEM education and basic needs. Grace contributes to programs
that improve quality of life in the most meaningful ways
possible, including education, health and human services
organizations, particularly in areas where Grace has a
significant employee presence.
Legg Mason
Under Armour
McCormick
McCormicks CSR score of +10 is the highest of the local
companies. With no concerns, the MSCI ratings highlights McCormicks dedication to waste management in
its operations, its commitment to employ directly and
indirectly through contracting under-represented groups
while maintaining high standards in its supply chain.
Finally, the score reflects McCormicks commitment to
high involvement of its workforce in the company as
well as its charitable giving. The score reflects several
of McCormicks initiatives as detailed below.
McCormicks CSR work demonstrates the Passion
for Flavor. In a four-pronged approach, McCormick
aims to promote Power of People to help employees
improve communities, to invest in Taste You Trust by
investing in sustainable agriculture, to provide Inspiring
Healthy Choices focusing on educating consumers, and
to improve Delivering High Performance by reducing
resources consumption.
T. Rowe Price
T. Rowe Prices CSR score of +4 reflects strength and
no concerns. T. Rowe Prices score reflects its commitment to diversity by employing underrepresented
groups, adopting positive policies on gay and lesbian
issues, and promoting women within its organization.
T. Rowe Price is committed to financial education
for children and judges it a critical investment in our
future. T. Rowe Price is a long-time partner to Junior
Achievement whose mission emphasizes education and
building financial capabilities. Together, they launched
Money Confident Kids to encourage wise spending
and saving. The program is intended to reach 75,000
children nationally in its first year online.
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